B-318703

September 30, 2009

The Honorable John D. Rockefeller IV
Chairman
The Honorable Kay Bailey Hutchison
Ranking Minority Member
Committee on Commerce, Science, and Transportation
United States Senate

The Honorable Bennie G. Thompson
Chairman
The Honorable Peter T. King
Ranking Minority Member
Committee on Homeland Security
House of Representatives

Subject: Department of Homeland Security, Transportation Security Administration: Air Cargo Screening

Pursuant to section801(a)(2)(A) of title 5, United States Code, this is our report on a major rulepromulgated by the Department of Homeland Security, Transportation SecurityAdministration (TSA), entitled "Air Cargo Screening" (RIN: 1652-AA64). We received the rule on September 8, 2009. It was published in the Federal Register as an "interim final rule; request for comments"on September 16, 2009. 74 Fed. Reg.47,672.

The interimfinal rule codifies a statutory requirement of the Implementing Recommendationsof the 9/11 Commission Act that TSA establish a system to screen 100 percent ofcargo transported on passenger aircraft by August 3, 2010. Pub.L. No. 11053 sect. 1602, 121 Stat. 266, 478 (2007). TSA determined it could notachieve this mandate by relying solely on aircraft operators to conductscreening because there is insufficient space and capacity for aircraftoperators to screen the approximately 12 million pounds of cargo transported onpassenger aircraft in the United States.Because TSA cannot meet the screening requirements established inthe 9/11 Act for cargo loaded in the U.S. without a system in place to screencargo off-airport by parties other than aircraft operators, this interim finalrule establishes a program under which TSA will certify cargo screeningfacilities located in the U.S. that volunteer to screen cargo prior totendering it to aircraft operators for carriage on passenger aircraft. The interim final rule requires affected passenger aircraft operators toensure that either an aircraft operator or certified cargo screening facilitythat does so in accordance with TSA standards, or TSA itself, screens all cargoloaded on passenger aircraft.

The interim final rule has a stated effective date ofNovember 16, 2009, and was issued without notice and public comment under itsauthority in 49 U.S.C. sect. 44901(g)(3)(A).In the interim final rule, however, TSA seeks prior public comment on a proposed fee to cover thecost of the TSA-conducted security threat assessment to certify cargo screeningfacilities and personnel. TSA also invitesinterested persons to participate in this rulemaking by submitting writtencomments to the interim final rule.

Enclosed is our assessment of TSA's compliance with theprocedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5with respect to the rule. Our review ofthe procedural steps taken indicates that TSA complied with the applicablerequirements.

If you have any questions about this report or wish tocontact GAO officials responsible for the evaluation work relating to thesubject matter of the rule, please contact Shirley A. Jones, Assistant GeneralCounsel, at (202) 512-8156.

signed

Robert J. Cramer
Managing Associate General Counsel

Enclosure

cc: MardiRuth Thompson
Deputy Chief Counsel
Regulations and Security Standards
Department of Homeland Security

ENCLOSURE

REPORT UNDER 5U.S.C. sect.801(a)(2)(A) ON A MAJOR RULE
ISSUED BY THE
DEPARTMENT OF HOMELAND SECURITY,
TRANSPORTATION SECURITY ADMINISTRATION
ENTITLED
"AIR CARGO SCREENING"
(RIN: 1652-AA64)

(i) Cost-benefit analysis

TSAconducted a cost-benefit analysis of this interim final rule. Overthe 10-year period of the analysis, TSA estimates that the aggregate costs ofthis rulemaking to total approximately $2.8 billion, undiscounted. Discountedat 7 percent, the cost is $1.9 billion, and discounted at 3 percent, the costis $2.4 billion. The cost of this rulewould be borne by five relevant parties: certified cargo screening facilities(CCSFs), non-CCSF entities that receive screened cargo from CCSFs, validationfirms, aircraft operators, and TSA. Additionally,industry will bear a cost for delayed shipment of cargo estimated at $297.1million over the 10-year analysis period ($203.1 million discounted at 7percent and $250.4 million discounted at 3 percent). TSA anticipates bearing costs to administerthe provisions of the rulemaking at $384 million over the 10-year analysisperiod.

(ii) Agency actions relevant to the RegulatoryFlexibility Act, 5 U.S.C. sections603-605, 607, and 609

Therule was published as an interim final rule, and therefore, a regulatoryflexibility analysis was not required under the Act. Note, Congress explicitly authorized TSA toissue an interim final rule in the ImplementingRecommendations of the 9/11 Commission Act.

(iii) Agency actions relevant to sections 202-205 ofthe Unfunded Mandates Reform Act of 1995, 2 U.S.C. sections1532-1535

TSAconcluded that this interim finalrule will not result in the expenditure by state, local, or tribal governments,in the aggregate, of $100 million or more in any one year (annually adjustedfor inflation) because it does not require them to take any action. TSA concluded, however, that the impact on theoverall economy does exceed the threshold, resulting in an unfunded mandate onthe private sector. In the interim finalrule, TSA documents the costs and alternatives associated with the regulatoryaction.

(iv) Other relevantinformation or requirements under acts and executive orders

Administrative ProcedureAct, 5 U.S.C. sections551 et seq.

TSA issuedthis rule as an interim final rule. Congress specifically authorized TSA toissue this rule as an interim final rule as a temporary regulation to implementrequirements ''without regard to the provisions of chapter 5 of title 5.'' 49 U.S.C. 44901(g)(3)(A). Since TSA issued an interim final rule underthe provision, TSA must follow it with a final rule as a permanent regulationimplementing the section within 12 months of the effective date of the interimfinal rule. 49 U.S.C. 44901(g)(3)(B)(i).

TSA also concluded that issuing this rule asan interim final rule is fully consistent with sections 553(b) and (d)of the Administrative Procedure Act (APA) that allow agencies a "good cause" exceptionwhich authorizes them to issue final rules without affording the public a prioropportunity to comment. TSA determinedit would be contrary to the public interest to delay this rule.

Paperwork Reduction Act, 44 U.S.C. sections3501-3520

Thisinterim final rule contains new information collection requirements that havebeen submitted to the Office of Management and Budget (OMB) for review.

Statutory authorization for the rule

TSAstates that this interim final rule is issued pursuant to the authority foundin the Implementing Recommendationsof the 9/11 Commission Act. Pub. L. No. 11053 sect.1602, 121Stat. 266, 478 (2007).

Executive Order No. 12,866 (Regulatory Planning andReview)

TSA concluded that this interim final rule isa major rule within the definition of Executive Order 12,866, as annual costsor benefits to all parties exceed the $100 million threshold in any year.

ExecutiveOrder No. 13,132 (Federalism)

TSAdetermined that this interim final rule will not have a substantial directeffect on the states, or the relationship between the national government andthe states, or on the distribution of power and responsibilities among thevarious levels of government, and, therefore, does not have federalismimplications.